Walmart’s Dollar Store Envy Strikes Again

Long before the incredible recession-era successes of dollar chains Walmart consistently revealed a strong case of dollar store envy. Target did as well but to a significantly lesser degree.Even as Walmart grew its traditional big box footprints to supercenter size, in order to advance to its current dominant status in the grocery world, the company found itself mimicked by its much smaller prototyped dollar store competition. While transitioning traditional Walmart stores to supercenters required considerably more real estate which resulted in even more costly conversions, dollar chains simply altered aisle space and allocations to accommodate additional groceries while gradually investing in freezers and refrigerators, requiring little to no additional real estate.

As with Walmart, dollar stores saw the addition of perishables as well as expanded grocery sections as a means of attracting regular customers to visit stores more frequently while luring additional shoppers to the thrift-based general merchandising concept. As the recession hit, the thrift concept became even more popular and for many consumers a necessity.

While Walmart’s everyday low price reputation stood the company in good stead, especially during the early months of the recession, dollar stores eagerly pursued a clever and aggressive growth strategy. Maintaining the integrity of their traditional compact retail footprints, dollar chains eagerly expanded into typical neighborhood sites, often located in communities among the most economically challenged by the recession. This strategy took advantage of declining bargain-based real estate prices and gave the dollar retailers a firm loyalty within these newly targeted communities.

As the recession wore on, Walmart experienced tepid to troubling financials domestically. Dollar chains, even to this most recent quarter, continued to grow at speeds that would be admirable in the best of economies. And here comes Walmart’s envy again.

In addition to maintaining compact and efficient footprints, dollar stores have increased their community credibility through dominance via neighborhood expansion. As the price of fuel rose greatly through the past two decades, Walmart overtly admired the growth of dollar store neighborhood locations and their attraction to consumers as a quick trip, both in terms of time needed to commute as well as a relatively short in-store trek to fully cover the diversity of goods dollar stores have to offer.

Walmart has never been able to steer clear of its admiration for the many competitive aspects of the dollar store economic model. Last year the world’s largest retailer introduced a concept that many thought to be Walmart’s answer to the dollar store. The rapid rollout of nearly a dozen Walmart Express locations was seen as a call to mimic the incredibly rapid expansion of top dollar store chains. At 15,000 sq. feet the typical Walmart Express was clearly far bigger than typical dollar store competition. That footprint could be comparatively prohibitive to entry in many costly urban real estate settings.

Early this year however Walmart quietly halted additional Express openings. Recently the Express location in Chicago was shuttered as its one-year lease expired. While Walmart had initially claimed this Express location would serve to supplement sales at its nearby big box, many felt the Express location served more to cannibalize from its nearby big brother. At best the Express concept was always essentially a work in progress as early on Walmart boldly looked to customers for merchandising suggestions. Signs throughout the stores featured comments such as ‘If you want it, we’ll get it’.

Despite the apparent back burner position of the future of the Express format, Walmart continues to pine for dollar store-like attributes and success. The company’s latest move to emulate a dollar store paradigm is a project called Dollar $tation. Actual Dollar $tations have been referred to as dollar stores in a box.

A recent article referred to Dollar $tations as Walmart’s attempt to take on Dollar Tree. Dollar $tations are essentially dark green scored heavy cardboard bins, placed strategically on pallets to offer a variety of unrelated ‘impulse’ items. These offerings can change from day to day and don’t represent any particular theme other than products being offered for a dollar. Bins are currently located at the discretion of local store management.

During a series of recent store visits I noticed that in one store the Dollar $tation was located near consumer electronics, in another the Dollar $tation was situated in an impromptu aisle at the front of a supercenter. Nearby were several other similar looking bins of varied colors, offering themed items designed to sell at bargain prices. One offered clearance items at 50% off. Another offered mostly HBC type items, each for eighty eight cents. Another offered a neat assortment of kitchen utensils for $1.88 each. Most of these utensils are similarly available at a nearby Dollar Tree for $1 as part of a far greater kitchen dollar selection.

Dollar $tation bins are overstuffed with a disparate variety of items, many meant for children. Batman and Spiderman products were among those designed to introduce children to drawing and painting. Puzzles and thin puzzle books abounded for both children and adults. There were a few plastic simple toys featured alongside adult oddities such as a six-pack of “Las Vegas’ style dice. In many cases the nearby bargain bins were easier to navigate and offered better prices or values.

This project is reminiscent of Target’s dollar bin initiative which began several years ago as a set-in place dollar section strategically situated near the front entrance. Metal pronged ‘dollar’ bins offered contents pegged to sell for a dollar. These bins were initially highly publicized.

Based on their longevity, they were able to attract a fair share of visitors entering Target locations. Due to their location, they were almost impossible to miss and early on I noticed them as much due to the number shoppers curiously investigating their contents for dollar bargains. This crowd of dollar bargain hunters has shrunk with time as either the novelty wore off or the products were not sufficiently inspiring shoppers.

After a while the bins began to include items at slightly higher price points and eventually lost their distinction as an actual dollar venue. Currently this section is titled, “$1 Happy Bargains $1’ with most bins offering contents for one dollar while several offer varying contents for $2.50. Offerings feature seasonal hopefuls which now revolve around Halloween. Staples include a number of snack foods including candy and chips. During a recent visit many bins were empty which means that either sales are extremely brisk or the concept is largely overlooked though located in a prime traffic area.

Dollar Tree and its dollar retailing competitors continue to heavily invest in new locations while fine tuning product selection with an eye toward increasing customer visits with a comprehensive variety of groceries and its usual ‘treasure hunt’ of new bargain items, all for one dollar. Meanwhile Walmart enviously quiets it Express initiative and rolls out cardboard bins to randomly offer impulse items which seem to lack much of a pulse.

Arthur has worked at Chain Store Guide for 20 years. He received a B.A. degree from City College of New York and attained a master’s degree in electronic communications from Brooklyn College. Please contact him if you have any questions or comments.